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Procurement Pulse - April 2017

Breach of the procurement rules raises the difficult dilemma of providing sufficient information to disaffected bidders to ensure that the playing field is as level as possible in terms of the information they have available to them should they wish to challenge the legality of a procurement process, whilst maintaining the integrity of confidential information. The Bombardier case below heralds publication of guidance from the Technology and Construction Court (TCC) on how to balance open justice on the one hand and confidentiality on the other in public procurement cases. We also look at refined guidance on the tests for satisfying standing in judicial review of public procurement procedures, and rare commentary on the meaning of the words "clarify, specify or fine tune" in the context of competitive dialogue in the Public Contracts Regulations, 2006 (PCR'06) - now "clarified, specified and optimised" in PCR'15. In the Ingsteel case (below), the Advocate General has advised the court that requiring bidders to provide proof of their economic standing with a statement from a bank that it would provide credit during the entire contract period is compatible with Directive 2004/18/EC. We will track the court's final decision in the case for a future edition of Procurement Pulse.

TCC approach to confidential information in public procurement claims

To date the Technology and Construction Court has marked all public procurement claims as "private", meaning that access to the court file is routinely denied. This was brought to the attention of Mr Justice Coulson in connection with the Bombardier case. Concerned that this approach does not properly address the "balance to be achieved between open justice and confidentiality", he stressed that the starting presumption should be for all documents to be made publicly available unless there are legitimate commercial interests which would be prejudiced by disclosure - and that redaction is preferable to claiming confidentiality over an entire document. As regards procurement documentation, he noted that by the time a challenge to the legitimacy of an evaluation process has been issued in the courts, 'a contracting authority cannot hope to argue there is any sort of confidentiality in the procurement documentation setting out information such as the evaluation regime'. The judge set out paragraphs 27-31 of the soon to be published TCC "Guidance Note on Procedures for Public Procurement Cases" (currently awaiting approval from the Master of the Rolls), excerpts from which are set out below:

“27. Public procurement claims frequently involve the disclosure of, and reliance upon, confidential information. Confidentiality is not a bar to disclosure. However, the need to protect confidential information needs to be balanced by the basic principle of open justice. Managing the use of confidential information in the proceedings tends to increase both the cost and complexity of the litigation. The Court will seek to manage the proceedings so that confidentiality is protected where genuinely necessary but ensuring that the issue of confidentiality does not give rise to unnecessary cost or complexity. Assertions of confidentiality should only be made where properly warranted.

28. Once a case has been allocated to a particular TCC judge, papers and communications, particularly those which are to be treated as confidential, should generally be passed through the relevant Judge’s Clerk to limit the risk of inadvertent disclosure.

29. Papers delivered to and communications with the Court and the Judge’s Clerk should be marked as “Confidential” if they are confidential.

30. It is recommended that documents containing confidential material are provided on coloured paper so that their confidential status is immediately apparent … Where relevant, the level of confidentiality should be identified either by a stamp or mark (e.g. “Confidential 1st Tier”) or by a particular colour of paper. [the use of "Tiers" in confidentiality rings will be set out in paragraphs 41-42 of the Guidance.]

31. Where necessary to protect confidential information the Court may, if requested, make an order restricting inspection of the Court files. Requests to restrict inspection should only be made where necessary....”

Disclosure of information after a public contract has been entered into is a key facet of the Government's commitment to public access to information on services delivery. This PPN updates PPN13/15, and applies not only to central government departments, but also to its suppliers (whether from the public, private, voluntary or community sectors). Those organisations must "proactively" release information about performance, through "Transparency" areas of their own websites, and publishing in accordance with open data principles. The PPN acknowledges exemptions to disclosure set out in the Freedom of Information Act, 2000 and mutually agreed confidentiality clauses, and reminds in scope organisations that eg the mechanism for arriving at the price charged to government may be exempt, but that does not constitute grounds for withholding the contract value itself. Good practice requires public and private sector parties to discuss, before contract award, the types of procurement and contract information which can be disclosed to the public, and ensure subsequent publication of that information in an accessible format.

Although very similar on the facts - local residents objecting to a town centre development (varied to reflect changing economic conditions) - the court did not follow the Gottlieb case, on the tests for allowing those who are not "economic operators" (and therefore have no remedy pursuant to PCR'06), to judicially review public procurement decisions. The court was clear that in determining "sufficient interest" to bring judicial review proceedings, a person's rights and interests must be considered in the context of, "the purpose of relevant legislation , its aims and objectives", and that where there is a "gulf" between the interests of the claimants and the policy and purpose of the legislation, then an application for judicial review of a decision impacted by that legislation will not be supported by the courts. In a procurement related application, a claimant must be able to demonstrate a direct impact upon them which would arise from the conduct of a competitive tendering exercise. In this case, a VEAT notice had been issued by Waverley Borough Council to put the market on notice that the value of land to be purchased by the developer for the purposes of the scheme was to be reduced, along with adjustments to the developer's profit element. As the court pointed out, if a full competitive tender was advertised for the revised contract (rather than just a VEAT notice), it would still have the effect of facilitating the scheme - which the claimants opposed primarily on grounds that it was inappropriate in scale and harmful to the historic environment. The claimants were therefore unable to demonstrate any direct impact upon them which would arise from Waverley Borough Council's conduct of its tendering exercise, and were not entitled to bring proceedings for judicial review.

Evidence of economic and financial standing may be required throughout the contract period (Advocate General Opinion)

The Slovak Football Association (SFA) advertised a contract to modernise 16 football stadiums. Candidates were required to provide a< statement from a bank confirming the grant of credit of EURO 3 million for the contract period. Instead, Ingsteel confirmed that for the duration of the contract it would have EURO 3 million in its bank account. Ingsteel was excluded from the procurement process. The referring court queried the time to which proof of economic standing must relate. Referring by analogy to the rules on relying on the capacity of other entities, the Advocate General opined that Directive 2004/18 did not preclude the SFA's approach to economic selection criteria - "When financial or economic resources are concerned, it is reasonable that these should not be ephemeral but should last until the contractual obligations have been performed."

At the end of the dialogue phase in a competitive dialogue procedure, certain elements of a payment mechanism had yet to be finalised. The version sent out with the invitation to submit final tenders included indexation and profit share provisions, and required tenderers to complete blank spaces in the text. Mistakenly, this version of the document was included in the final contract, not the version completed and submitted by Viridor with its final tender. In the course of defending a claim for rectification of the contract, it was argued that the procuring authority breached PCR'06 by failing to agree by the end of the dialogue phase the precise profit share and approach to indexation. These issues went beyond the right to "clarify, specify or fine tune" aspects of final tenders, as set out in regulation 18(26) of PCR'06. The judge disagreed - "Competitive dialogue is a process which seeks to narrow the points in issue, so that the remaining tenderers can then return a final tender on a common basis. Ordinarily following a competitive dialogue, the principal differences between the tenders will simply be the figures… The only thing that the claimant had to avoid was treating [tenderers] differently. That is the reason for the qualification in Regulation 18(26) ("likely to distort competition or have a discriminatory effect")."

Compare jurisdictions: Arbitration

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